Broker snap: Strong third quarter for Burberry, says Nomura

17th Jan 2012 10:01

Nomura has maintained its buy stance and 1,530p target price on luxury brand Burberry, despite the negative market reaction on Tuesday, saying that the firm has reported a strong third quarter and brand momentum remains intact.Underlying revenues grew by 21% in the three months ended December 31st, towards the top of the expected range of £556m-579m, Nomura said.The broker highlights the double-digit mainline comparable store sales growth in Asia and Europe with the Americas up high single digits. However, analysts note that Wholesale growth remains in the mid-teens (excluding structural changes and planned terminations) and "slower licensing in 4Q is primarily owing to the annualisation of the step-up in terms in Japan."Nevertheless, the broker remains confident: "Burberry is well positioned to accelerate investment and space growth, while defending comp store sales through product development, flagship market investment and innovative marketing."Meanwhile, Investec has also maintained its buy rating on the stock today, saying that total revenues beat its own forecasts of £568m. The broker notes that Chinese like-for-like sales continued at 30% - "a slowdown here had been a key worry of the bears, so this should reassure."However, Investec does note the "subdued" Americas reported growth of just 4%. Its 1,310p target price is put under review.Shares were trading down 1.54% at 1,280p by 10:00, having come off their earlier lower of 1,253p.BC